Should the Pandemic Cause You to Re-Evaluate Your Supply Chain?

There’s nothing like a crisis to show you which of your suppliers are dependable, and which ones just don’t live up to expectations.  For a lot of manufacturers, the COVID-19 pandemic has been an eye-opening supply chain experience.

In all fairness, suppliers and vendors have never been tested the way they have been in the past few weeks.  The pandemic has challenged every business in ways we’ve never seen before, and no matter what business you’re in, you may find yourself in the position of scrambling to find new suppliers to meet your basic supply chain needs.

We all know that the most successful manufacturers embrace their vendors and suppliers as partners, but now may be the time to take a more discerning look at those partners.  No matter how good your relationship with current suppliers, the pandemic may have highlighted supply chain vulnerabilities that you hadn’t considered before.

Even if you’ve been working with a particular vendor for a long time and have an established relationship, there comes a time when you should re-examine the relationship.  The Coronavirus may be the catalyst to do that in your organization.  Long-time relationships shouldn’t automatically get vendors who fall short a pass.

As the country begins to open back up, and you begin looking at your own organization’s comeback, will your current suppliers help you get there, or will they get in the way?  Is your supply chain set up to avoid these types of vulnerabilities in the future?  Here are some things to consider.

At the beginning of your supplier relationship, you should have determined the factors that were important to your business.  These are all the criteria you used to choose your vendors.

Each business sets it’s own performance indicators, such as dependability, flexibility, scalability, etc.  Presumably, these are characteristics that your supply chain vendors already possessed when you initially engaged them.  As you begin the evaluation process, these are the basic performance indicators you should start with to re-evaluate their current performance – but you shouldn’t stop there.

It’s very possible that the COVID-19 pandemic has pointed out shortcomings in your previous performance indicators.  For example, scalability is often misjudged in suppliers.  Manufacturers are often concerned about whether their vendors can ramp up when they need additional supply, but can they scale back successfully when you’re production goes down?  When it comes to scaling back, it’s not just a matter of sending you fewer orders.  Can the vendor’s business survive at a lower supply level in a short-term crisis?

Another shortcoming that a lot of supply chain managers are discovering is how vulnerable they are to the vendor’s problems.  In other words, what if your supplier has an emergency situation that disrupts their production.  During the pandemic, we’ve seen vendors shut down due to lower orders, but we’ve also seen them shut down because COVID-19 illness.  In the case of COVID-19, business locations have shut down for days, to allow for cleaning, but they’ve also shut down indefinitely due to widespread illness or fear of illness.

If your supplier doesn’t have redundancies in place, or if they don’t have an emergency plan that allows them to continue to meet their customer needs, then you may find your own production in jeopardy.  A lot of times, supply chains are like dominoes.  Knock one of them over and the whole line collapses.

We all know that the pandemic has been unprecedented, and that it has affected businesses in a lot of unexpected ways.  In some ways, business and supply chains will never be the same because so many new vulnerabilities have come to light.

There are a lot of businesses that will be permanently shuttered.  Some may not make a good comeback and lose their places as the market leaders that they were before.  There’s not much doubt about that, as sad as it is.

But as we open the country back up and the economy builds back up, there will also be a lot of opportunities out there.  Is your organization ready for the comeback?

That being said, there are a couple of other reasons that you may want to consider re-evaluating your supply chain:

A lot can change in short time, and that’s doubly true during a crisis.  Things in your industry may have changed, or are on the verge of changing, during the economic build up.  Taking a look at all your options, now that the crisis is under control, may show you a better way to do things or offer you better supply chain alternatives.

That may sound a little mercenary at this point in the comeback, but you really can’t wait around for your suppliers if you’re organization is ready to roll on production.  Many suppliers will not survive the crisis.  It’s unfortunate, but true.

Even if your current supply chain partners did survive, are they ready to get back to work when you are?  Just because you’re ready to go back to full or partial production, doesn’t mean that your suppliers have even opened up shop yet.  You may have to open up new relationships to get back to work.

One of the things that we’ve found surprising during the pandemic is how many manufacturers have contacted us about re-designing their industrial packaging.  They took advantage of the downtime to really dig into their supply chains and find ways to make it better, more efficient, and more profitable.

Whether it’s with your current partners, or new suppliers, this might be the perfect time to evaluate more than just suppliers.  It might also be a great time to evaluate your processes and your production.

There are a lot of factors that your organization used to choose your current supply partners.  Unfortunately, the pandemic crisis has highlighted a lot of vulnerabilities in the supply chain because it has challenged businesses like never before.

Now might be the perfect time to begin re-evaluating your supply chain and suppliers.  After all, your organization wants to be ready for a comeback when the country opens back up and the economy comes back to life.  Now is the time to make sure you’ve got all the right supply chain pieces in place.